Supreme Court orders Indian telcos to pay US$13b or face action

A rickshaw puller speaks on his mobile phone as he waits for customers in front of advertisement billboards belonging to telecom companies in Kolkata February 3, 2014. — Reuters pic
A rickshaw puller speaks on his mobile phone as he waits for customers in front of advertisement billboards belonging to telecom companies in Kolkata February 3, 2014. — Reuters pic

NEW DELHI, Feb 14 — India’s Supreme Court today ordered top telecom companies to pay US$13 billion (RM53.8 billion) in unpaid spectrum and licensing fees by March 17 or face punishment in a fresh blow to ailing mobile carriers.

Shares in Vodafone Idea, which said it would be hardest hit by the ruling, fell 23 per cent on Mumbai’s Sensex Index exchange after the court’s announcement.

Bharti Airtel and Reliance Jio — owned by Asia’s richest man Mukesh Ambani — were also hit by the order, which comes after the companies failed to obey an October ruling demanding payment of overdue levies within three months.  

The court has threatened contempt proceedings against the companies and Department of Telecommunications government officials for non-compliance with that ruling.

The long-running row between the government and India’s big telecoms has centred on how licence and other fees paid by the firms should be calculated. 

Companies argue they should be based on income from only their telecoms business, while the court ruled they should be calculated on the amount earned from all business dealings, including handset sales and other income.

Today, the companies asked the court for more time to pay, which Justice Arun Mishra described as “complete nonsense”.

Vodafone Idea, a joint venture of Britain’s Vodafone Group and India’s Idea Cellular will have to stump up about US$3.9 billion.

Airtel has to pay US$3 billion while Jio, which escaped with a lighter fee has already paid US$1.8 billion.

Vodafone Idea’s “survival is in jeopardy as there is no support either from the government or the parent company,” Baburajan K., editor of TelecomLead.com, told AFP.

“They have no funds or capacity to service existing customers.” 

A Vodafone spokesman said the company leadership was reviewing the comments.

Bharti Airtel’s shares rose almost five per cent however.

Analysts said Airtel and Reliance Jio would benefit the most from any Vodafone Idea collapse, which could lead to the Indian market being dominated by two leading companies.

Baburajan said such a duopoly would “weaken” the Indian telecoms sector and limit choice for its 900 million subscribers.

Jio, which was launched in 2016 and is the top operator in terms of subscribers and revenue, has a relatively light US$1.8 billion bill. — AFP

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